Kuwait Refuels Refinery Hopes

The government of Kuwait has breathed new life into a long-stalled US$14.5 billion refinery project by giving preliminary approval for funding.

A contractor said construction contracts were expected to be awarded later in 2010.

The refinery at Al Zour, which would be the country’s fourth plant, is a crucial part of Kuwait’s efforts to modernize its energy sector and diversify the economy away from crude oil exports.

Parliament on Tuesday passed a four-year, US$104 billion spending plan to provide funding to the oil and gas industry, and other key development projects.

An official at Kuwait National Petroleum Company (KNPC), who was not authorized to speak to the media, confirmed yesterday that funding for the fourth refinery was included in the spending plan.

The government shocked foreign investors when it unilaterally cancelled contracts for the refinery last March, after Kuwait’s parliament complained that the project had not been correctly awarded.

But the new progress from the government, together with a move to compensate contractors affected by the cancellation, had revived interest in the project, said Kong Hong-pyo, the executive vice president of Samsung Engineering, a Korean industrial engineering firm.

“In Kuwait, there has been a considerable delay for their fourth refinery, but I understand they settled all the pending issues with their previous contractors and I was told the new tender is coming some time later this year,” said Kong, who confirmed his firm was interested in bidding.

The KNPC official declined to speculate on a timetable for the refinery, adding that “the project will be implemented on the approval of the Supreme Petroleum Council”. - The National